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Last updated: 8 February 2009

9.1 ICAC, the Ombudsman and the Auditor-General

1 Overview

There are a range of mechanisms available in NSW to ensure that public authorities, including local councils and council employees, are publicly accountable for their actions. This Fact Sheet describes how some of these mechanisms work, and how complaints can be made to them.

1.1 Summary

Concerns about corrupt conduct should be made to, and are investigated by, the Independent Commission Against Corruption (“ICAC”). Public officials who make a complaint to ICAC are protected from reprisals and other retaliatory actions under the Protected Disclosures Act 1994.

Complaints about the conduct of public authorities, which may not necessarily be corrupt but which constitutes some sort of maladministration such as behaviour which is illegal, unreasonable, unjust, or based on improper motives, can be made to the NSW Ombudsman. A complaint to the Ombudsman should only be made if the complainant has exhausted all other avenues of complaint, review or appeal (including any right of appeal to the Land and Environment Court ).

Complaints about the systemic failure of a government department to carry out its regulatory responsibilities in an economically efficient and effective manner can be referred to the NSW Auditor-General. The Auditor-General can conduct an audit of a government department into how it is operating, and can report to Parliament.

Public authorities are also required to make certain documents available to the public, if requested, under the Freedom of Information Act 1989.

The public often have concerns about political donations which are made to public authorities, such as Ministers and local government, which deal with planning and development matters. On 1 October 2008, new laws came into effect which require developers to disclose political donations and gifts when lodging a development proposal (such as a development application).1

• For more information on the obligation of developers to disclose political donations, see Fact Sheet 2.2 on Planning and Development.

1.2 Useful web links

ICAC is an independent statutory body in NSW which receives and investigates complaints about corruption in government:

• Click here to go to ICAC's website http://www.icac.nsw.gov.au/

The main legislation regulating corrupt conduct in NSW is the Independent Commission Against Corruption Act 1988.

• Click here to go the Independent Commission Against Corruption Act 1988 http://www.austlii.edu.au/au/legis/nsw/consol_act/icaca1988442/

Public officials are protected from recriminations if they make a complaint about corruption by the Protected Disclosures Act 1994 (“whistle blower legislation”):

• Click here to go to the Protected Disclosures Act 1994 http://www.legislation.nsw.gov.au

The NSW Ombudsman is an independent and impartial watchdog whose role is to ensure that NSW government agencies fulfill their functions properly.

• Click here to go to the NSW Ombudsman's website http://www.ombo.nsw.gov.au/

The NSW Auditor-General can conduct an audit to review any systemic failure of a public authority to carry out its regulatory responsibilities:

• Click here to the NSW Audit Office website http://www.audit.nsw.gov.au/

1.3 Useful legal texts

• Administrative Law, Douglas, R. (2 nd ed, 2004)

2 Independent Commission Against Corruption

Complaints about corrupt conduct in NSW should be directed to ICAC. The legislation which establishes the ICAC and sets out its powers to investigate corruption is the Independent Commission Against Corruption Act 1988.2

2.1 Minister responsible

The Premier is responsible for administering the Independent Commission Against Corruption Act 1988.

2.2 Main functions of ICAC

ICAC is an independent statutory body created by the Independent Commission Against Corruption Act 1988.3

ICAC's principal aims are to:4

• investigate, expose and prevent corruption involving public authorities (including local councils) and public officials, and
• to educate public authorities, public officials and members of the public about corruption.

ICAC is a public authority, but is independent of the government of the day. It is not subject to the direction of politicians or government officials. It is accountable to the people of NSW through the NSW Parliament.

ICAC can conduct an investigation in response to a complaint, or on its own initiative.5

A common misconception is that ICAC prosecutes corruption offences. In fact, ICAC only investigates and reports. It is then up to the Director of Public Prosecutions to decide whether or not to lay charges for a particular criminal offence.

2.3 What is “corrupt conduct”?

The kind of corrupt conduct that ICAC can investigate is defined in the Independent Commission Against Corruption Act 1988.6

“Corrupt conduct” is defined as:7

• any conduct of any person (whether or not a public official) that does or could adversely affect the honest or impartial exercise of official functions by any public official or public authority
• any conduct of a public official that involves the dishonest or partial exercise of his or her official functions, or a breach of public trust, or
• any conduct of a public official (or former public official) that involves the misuse of information acquired in the course of their official duties.

In particular, “corrupt conduct” also includes the conduct of any person (whether or not a public official) which adversely affects the exercise of official functions by any public official or public authority, such as:

• official misconduct (fraud in office, breach of trust or extortion)
• bribery
• blackmail
• obtaining or offering secret commissions
• fraud
• theft
• perverting the course of justice
• embezzlement
• election bribery, election funding offences and election fraud
• tax evasion
• illegal drug dealing
• illegal gambling
• bankruptcy and company law violations, and
• forgery.

For the conduct to fall within the definition of “corrupt conduct” which ICAC can investigate, the conduct also needs to constitute or involve a criminal or disciplinary offence, or give rise to reasonable grounds to terminate someone's employment.8

ICAC can only examine conduct involving NSW public officials, either directly or indirectly. For example, ICAC could investigate conduct by a person who is not a public official if that person is attempting to influence a public official.

ICAC is able to investigate complaints of corruption by local council officers, employees and councilors, as a local council falls within the definition of a “public authority”.9

ICAC can also investigate complaints of corruption by Ministers or members of Parliament.10 Ministers and Members of the NSW Parliament can be found to have engaged in corrupt conduct if their actions constitute a substantial breach of the code of conduct which applies to them.11

2.4 Reporting corruption

Any person can make a complaint to ICAC about a matter that concerns, or that they suspect may concern, corrupt conduct.12

Reports from members of the public inform ICAC about the types of corruption occurring within the NSW public sector and help identify the risk areas. This enables ICAC to recognise patterns and trends in corruption and to ensure its work provides the greatest benefit to the people of NSW.

The principal officer of a public authority is under a statutory duty to report to ICAC any matter that they reasonably suspect may concern corrupt conduct.13 Where a local council is concerned, the general manager of the council is designated as the principal officer who is under the duty to notify.14

Public officials are encouraged to come forward and report suspected corrupt conduct to ICAC.

Public officials who make a disclosure (complaint) to ICAC will be protected under the Protected Disclosures Act 1994 from any reprisals or actions, but only:

• if their disclosure is made in accordance with the Independent Commission Against Corruption Act 1988,
• and the disclosure shows or tends to show that a public authority or public official has, is or intends to engage in corrupt conduct.15

For more information on the Protected Disclosures Act 1994, see para 3 below.

A complaint can be made to ICAC online, or by downloading the online complaint form and mailing or faxing it to ICAC. If you are unsure if a matter should be reported to the ICAC, you can also seek advice from an ICAC Officer over the phone.

• ICAC's online complaint form: http://www.icac.nsw.gov.au/go/reporting-corruption/information-for-the-public/online-complaint-form

2.5 ICAC chooses whether to investigate a complaint

After receiving a complaint, ICAC decides whether to investigate the complaint or not.16 In deciding whether to conduct, continue or discontinue an investigation, ICAC can consider whether the subject-matter is trivial, the conduct took place too long ago, or if the complaint was frivolous or vexatious.17

Although ICAC can investigate any allegation or complaint of corrupt conduct, the Act directs ICAC to focus its attention, as far as possible, on serious corrupt conduct and systemic corrupt conduct.18

If ICAC decides to discontinue or not to commence an investigation of a complaint or report made to it, ICAC must inform the complainant or officer who made the complaint or report in writing of its decision and the reasons for it.19

3 Protected disclosures

The Protected Disclosures Act 1994 provides protection for public officials who act as “whistleblowers” when they identify maladministration, corruption, or serious and substantial financial waste. A “public official” includes an employee of a local council.20

The object of the Protected Disclosures Act 1994 is to encourage and facilitate the disclosure of maladministration by setting out the procedure for public officials to make such disclosures, and by protecting them from any reprisals.21

Only public officials are protected by the Act.

3.1 Procedure for disclosure by a public official

An official will only receive protection under the Act if they make their disclosure in accordance with the strict procedure set out by the Act. For a public official to be protected under the Protected Disclosures Act 1994, the person must make the disclosure to:22

• an investigating authority, or
• to the principal officer or another officer of a public authority.

In addition, the complaint must be made voluntarily and in accordance with any procedure established by the authority concerned for the reporting of corrupt conduct, maladministration or serious and substantial waste of public money (eg an agency's internal reporting guidelines).23

Complaints to the following organisations are expressly protected under the Protected Disclosures Act 1994 if made in accordance with the process set out under the Act:

• disclosures of corrupt conduct to ICAC,24
• disclosures to the Ombudsman concerning maladministration,25
• disclosures to the NSW Auditor-General concerning a serious and substantial waste of public money by an authority or an officer of an authority,26 and
• disclosures to the Director-General of the Department of Local government concerning serious and substantial waste in local government.27

In some circumstances, disclosures to a member of Parliament or journalist are also protected.28 For example, the person making the disclosure must already have made the complaint to an investigating authority or public authority, which must either have failed to investigate the matter or not completed their investigation within 6 months, and the complaint must be substantially true.29

3.2 What protection does the Act offer?

If a public official follows the procedure set out under the Protected Disclosures Act 1994 for making a disclosure, then they will be protected in the following ways:

• protection against reprisals : it is an offence for a person to take any detrimental action in reprisal against the person who made the disclosure, including through intimidation, harassment, discrimination or dismissal from their employment,30
• protection against legal actions : for example, the person will not be liable for defamation or a damages claim,31 and
• protection of their name and identity : unless the person who made the disclosure agrees.32

4 NSW Ombudsman

The NSW Ombudsman is an independent and impartial watchdog whose role is to investigate any improper conduct by public authorities. The Ombudsman's powers are quite limited in that the Ombudsman only has power to investigate and report on inappropriate conduct.

The work of the Ombudsman is regulated by the Ombudsman Act 1974. The Premier has responsibility for the Act.

The Ombudsman is a person appointed by the Premier.33 The appointment is for up to 7 years.

4.1 Who can the Ombudsman investigate?

The organisations or areas of regulation which the Ombudsman can investigate include complaints about public authorities, including:

• local councils, its employees and councilors34
• the police
• freedom of information, and
• protected disclosures.

Certain conduct cannot be investigated by the Ombudsman.35 Schedule 1 of the Act contains a list of public authorities whose conduct is excluded from the Act.

4.2 What sort of conduct is the Ombudsman concerned with?

In conducting an investigation, the Ombudsman will investigate whether any conduct has been:36

• illegal
• unreasonable, unjust, oppressive or improperly discriminatory
• based on improper motives, irrelevant grounds or irrelevant considerations
• based on a mistake of law or fact, or
• otherwise wrong.

4.3 Complaints to the Ombudsman

Any person (including a public authority) can complain to the Ombudsman about the conduct of a public authority.37 If a person does not wish to make a complaint themselves, they can ask a member of Parliament to do it on their behalf.38

Complaints should be made in writing, although the Ombudsman can accept a complaint that is not in writing if the Ombudsman considers it appropriate to do so.39

4.4 Ombudsman decides whether to investigate conduct

The Ombudsman decides whether to investigate the conduct of a public authority, and can do so in response to a complaint or on its own initiative.40 In particular, the Ombudsman will be concerned to see that the complainant has tried to resolve their complaint with the public authority first, and that they have exhausted any complaint and appeal rights before approaching the Ombudsman.

The Ombudsman can decide not to investigate a matter, or to discontinue an investigation if the Ombudsman thinks that:

• The complaint is frivolous, vexatious or not in good faith
• The complaint is trivial
• The event took place too long ago, or
• The complainant has an alternative and satisfactory means of redress.

In particular, the Ombudsman cannot investigate the conduct of a local council if the complainant has a right of appeal or review available under another Act (eg the right to bring a merits review under the EPA Act), unless there are special circumstances which explain why the right was not exercised.41

4.5 What can the Ombudsman do?

After making an investigation into a person or organisation's conduct, the Ombudsman will make a report, including reasons for any findings.42

The Ombudsman can make recommendations in the report, which can include a recommendation:43

• that the public authority reconsider its conduct,
• that action be taken to rectify or change the conduct,
• that reasons be given for the conduct,
• that any law or practice relating to the conduct be changed, or
• that compensation be paid to any person.

The report must be given to the Minister responsible for the area concerned, the head of the public authority whose conduct is reviewed in the report, and to the complainant (if the investigation was triggered by a complaint).44

In cases where serious misconduct has occurred, the Ombudsman can recommend to the responsible Minister or public authority that a person be dismissed, removed or punished.45 The Ombudsman can also refer matters to the Director of Public Prosecutions or to ICAC for their consideration.46

5 NSW Auditor-General

Referring matters to the NSW Auditor-General is one mechanism by which the NSW Parliament can hold the government accountable for fulfilling its responsibilities. The Auditor-General is independent of government and is appointed under the Public Finance and Audit Act 1983.47

The Auditor-General is the chief executive officer of the Audit Office, whose purpose is to assist the Auditor-General in fulfilling the Auditor's role.48

The NSW Auditor-General can conduct audits into how the NSW government operates. These audits can identify substantial flaws in government practices, which in turn can lead to reform. Audits can cover a very wide range of topics, including for example the sustainability of native forest operations (logging) by Forests NSW, the clearing of native vegetation and the use of private waterfront tenancies on public land.

5.1 Audit powers

The types of audits which the Audit Office can conduct include:

• Financial audits – which identify whether government agencies are complying with accounting standards, relevant laws, regulations and government directions.
• Compliance audits - these audits investigate whether a government department is complying with its specific legislative responsibilities
• Performance audits – these look at whether a government Department is operating efficiently and economically.49
• Protected Disclosure investigations - the Audit Office can examine allegations by public officials of serious and substantial waste of public money which are made under the Protected Disclosures Act 1994 (except those relating to local government): (see paras above).50

5.2 Making a complaint

Concerns about the general performance of government departments can be reported orally or in writing to the NSW Audit Office.

5.3 Reports to Parliament

In most cases, the result of an audit by the Auditor-General will result in the Auditor-General presenting a report to the Minister responsible for the government Department concerned, as well as to the Parliament.51

1. Local Government and Planning Legislation Amendment (Political Donations) Act 2008, inserted new provisions into the Environmental Planning and Assessment Act, s 147.
2. See also the Independent Commission Against Corruption Regulation 2005.
3. Independent Commission Against Corruption Act 1988, s 4.
4. Independent Commission Against Corruption Act 1988, s 2A(a).
5. Independent Commission Against Corruption Act 1988, s 20(1).
6. Independent Commission Against Corruption Act 1988, s 7, 8.
7. Independent Commission Against Corruption Act 1988, s 8(1).
8. Independent Commission Against Corruption Act 1988, s 9.
9. Independent Commission Against Corruption Act 1988, see s 4 Definitions of “public authority” and “local government authority”.
10. Independent Commission Against Corruption Act 1988, s 4 Definition “public official”.
11. Independent Commission Against Corruption Act 1988, s 9(1)(d); s 9(3).
12. Independent Commission Against Corruption Act 1988, s 10(1).
13. Independent Commission Against Corruption Act 1988, s 11.
14. Independent Commission Against Corruption Act 1988, s 11(5); Independent Commission Against Corruption Regulation 2005, cl 19(a).
15. Protected Disclosures Act 1994, s 10.
16. Independent Commission Against Corruption Act 1988, s 10(2).
17. Independent Commission Against Corruption Act 1988, s 20(3).
18. Independent Commission Against Corruption Act 1988, s 12, 13.
19. Independent Commission Against Corruption Act 1988, s 20(5).
20. Protected Disclosures Act 1994, s 4 Definition “public official”.
21. Protected Disclosures Act 1994, s 3.
22. Protected Disclosures Act 1994, s 8(1).
23. Protected Disclosures Act 1994, s 8(1)(c), 9(1).
24. Protected Disclosures Act 1994, s 10; “corrupt conduct” is defined in the Independent Commission Against Corruption Act 1988, s 8, 9: see paras above.
25. Protected Disclosures Act 1994, s 11.
26. Protected Disclosures Act 1994, s 12; Public Finance and Audit Act 1983, s 52C – 52D..
27. Protected Disclosures Act 1994, s 12B.
28. Protected Disclosures Act 1994, s 8(1)(d), 19.
29. Protected Disclosures Act 1994, s 19.
30. Protected Disclosures Act 1994, s 20.
31. Protected Disclosures Act 1994, s 21.
32. Protected Disclosures Act 1994, s 22.
33. Ombudsman Act 1974, s 6.
34. Ombudsman Act 1974, s 5 Definition “public authority” (g1).
35. S 12(1).
36. Ombudsman Act 1974, s 26(1).
37. Ombudsman Act 1974, s 12.
38. Ombudsman Act 1974, s 12(2).
39. Ombudsman Act 1974, s 12(4), (4A).
40. Ombudsman Act 1974, s 13AA, 13(1).
41. Ombudsman Act 1974, s 13(5).
42. Ombudsman Act 1974, s 26(1).
43. Ombudsman Act 1974, s 26(2).
44. Ombudsman Act 1974, s 26(3), (4).
45. Ombudsman Act 1974, s 38.
46. Ombudsman Act 1974, s 31AB.
47. Public Finance and Audit Act 1983, s 27B, 28; Schedule 1, cl 5 provides that the Auditor-General can only be removed from office by the Governor following a vote to do so by both Houses of Parliament.
48. Public Finance and Audit Act 1983, 33A(3), 33B.
49. Public Finance and Audit Act 1983, s 38A – 38C.
50. Public Finance and Audit Act 1983, s 52C – 52D.
51. Public Finance and Audit Act 1983, s 38E, 52, 52B, 52E.

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